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Water bill bungle hits households

Rachel Wells
June 13, 2012
MELBOURNE households have been overcharged by more than $300 million for their water in an administrative error that will leave consumers out of pocket for the next five years.
Households are believed to have been overcharged by an average of about $177 each for water in 2011 - but Melbourne Water has enraged consumer groups by saying it will take five years to repay the money.                                                                                               Illustration: Ron Tandberg.
Illustration: Ron Tandberg.
A draft of Melbourne Water's business plan for 2013 reveals that it excessively billed customers by a total of $306 million by mistakenly charging them for the desalination plant before construction had finished and when it had not yet delivered a drop of water.
The Age believes households serviced by any of the city's three water retailers - Yarra Valley Water, City West Water and South East Water - would be entitled to refunds averaging about $177.
However, consumer groups are outraged that rather than returning that money to households immediately, through a reduction in their next water bills, the $306 million will be used to offset bill increases over the next five years.
Gerard Brody, from the Consumer Action Law Centre, says consumers should have their money returned immediately. ''If consumers have overpaid them then I see no reason why Melbourne Water shouldn't just return that money as soon as possible,'' he said.
''Consumers are currently struggling with the cost of essential services including electricity, gas and water bills and yet this business wants to hold on to their money.''
Melbourne Water's general manager of strategic planning, Ben Furmage, said yesterday households were charged too much because payments scheduled to be made to desal plant operators AquaSure on the completion of the project were not required when the plant was not finished on time.
The money to pay Aquasure was nevertheless recouped from consumers.
The beleaguered Wonthaggi plant was originally due to be completed and ready for production by December 2011.
A further deadline of June 30 this year was subsequently announced as the date for when the plant was due to be fully operational. AquaSure has since requested an extension of the second deadline to the end of February 2013.
Mr Furmage suggested the billing blunder was not Melbourne's Water's fault. ''The over-recovery [of money] from the city retailers in the current pricing period was due to external factors beyond our control such as construction delays and higher costs at the Wonthaggi desalination plant,'' he told The Age.
''We will rectify this in the next [five-year] period to ensure customers are returned the over-recovered revenue, with $316 million to be returned over the period. This will help offset future increases in water bills from the desalination plant,'' he said. That includes $10 million in interest and inflation.
''We're acutely aware that the over-recovery is a bitter pill for customers at a time of increasing prices and we've done a lot of work to arrive at the best way to ensure impacts are minimised.''
However, he said repaying the money immediately would jeopardise the ''financial stability'' of the water authority.
''Giving it all back in the first year would result in big wholesale and retail bill fluctuations in subsequent years and impact our financial stability in the face of ongoing annual desalination costs of at least $650 million.''
Melbourne Water's proposed method of repayment is yet to be approved by the Essential Services Commission, which will review Melbourne Water's final plan when it is submitted in September.
The water body could not confirm how consumers would know they had been repaid the money they were owed, as it was unlikely to be itemised on their water bills.
However, it said the commission would hold it accountable. ''We are regulated by the Essential Services Commission which is the independent umpire,'' Mr Furmage said.